7 Surprising Factors That Can Have a Huge Effect on Your Car Insurance Rate

Car insurance premium rates can feel arbitrary and unjust to many of us. What actually goes into them — and why?

Turns out, it’s not so arbitrary.

Your rate is actually determined through a complicated algorithm aiming to predict how likely you are to cost your provider money.

“Depending on the state, we may use your vehicle type, where you live, gender and age amongst other (factors) to determine your rate,” says Progressive Insurance spokesperson Ron Davis.

We dug into just what these factors are and why they’re included to help you understand where your rate comes from — and what you can do to reduce it.

What Affects Car Insurance Rates?

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Here’s what you probably know when it comes to car insurance rates.

Let’s start with the obvious: your driving record.

“Your driving record and a continuous car insurance history are two important factors,” Davis says.

Even minor violations, like a speeding ticket, can affect your rates 20% to 40%, according to Insure.com. “If you have a major violation, like a DUI, your rates can go up 100% or more due to the combination of lost discounts and increased rates.”

The number, frequency and circumstances of your insurance claims will also be a major factor. More claims, especially if you’re at fault, make you riskier to an insurance company, so your rate will be higher.

Your age and driving experience will have a major impact.

It’s not about discrimination. As Insure.com points out, it’s all about the numbers.

“Young, novice drivers have statistically shown to be immature behind the wheel, easily distracted and to crash — a lot — so they are the riskiest category of drivers to insure,” the site explains.

However, California, Hawaii and Massachusetts do not allow insurers to use age to determine your rate.

What are the parts of the algorithm you don’t know about? Here are seven surprising factors that may affect your car insurance rate.

2. What Kind of Car You Drive

“You may have heard the color of your car is used in calculating car insurance rates,” Davis explains, “but this is something we don’t even ask for when you get a quote from us.”

However, the make and model of your car could make a difference.

Different cars cost different amounts of money to insure. That’s because data shows certain cars are more likely to be in accidents or have insurance claims filed.

For example, “Sporty cars tend to be driven in ways that lead to more crashes,” Russ Rader, spokesman for the Insurance Institute for Highway Safety told Bankrate. “They also tend to be driven by younger, riskier drivers.”

An insurance company will also look at your car’s purchase price, the typical cost of repairs and how it performed in safety tests — all factors that will determine how much it might cost them.

3. Where You Live

“Drivers are sometimes surprised to learn that where you live can impact your rates,” Michal Brower, a State Farm spokesperson, told us. “But once you consider why, it makes sense: If you live in a big city with tons of traffic, you are more likely to get in a wreck than if you live in an extremely rural area with little traffic.

“Generally, due to higher rates of vandalism, theft and accidents, urban drivers pay more for car insurance than do those in small towns or rural areas.”

Weird regional data may affect your rate, too.

My mom told me her rate went up when she moved from a relatively urban county in Wisconsin to a more rural county… where deer-related collisions are more common. It all adds up!

5. Your Credit History

“Though it may be controversial, research has shown that those with lower credit scores (typically under 600) are more likely to file more claims, file inflated claims and even commit insurance fraud. You'll likely see a hike in your premiums due to a low credit score,” Insure.com reports.

A University of Texas Study also found those with lower credit scores incur more car insurance losses and higher claim payouts.

6. How You Use Your Car

If you use your car for business — including ridesharing and food delivery — be sure to check whether it’s covered under your personal insurance policy.

“You may need a business-use or commercial policy instead and be voiding your personal policy by using your car for business,” Insure.com reports.

Unfortunately, these policies will probably cost you more than a personal policy. But they’ll also cover you in case anything happens while you’re driving for business.

7. The Length of Your Commute

Even if you work for an employer, your commute could affect your insurance rate.

“You insurer can try to determine from the length of your commute if you head into a metro area from your rural or suburban home,” Insure.com states.

“If you live outside of Atlanta, for instance, but your commute is 30 miles, your insurer can predict that though your local area is low risk, your commute into the heart of a heavily populated metropolitan area puts you at greater risk.”

2. Look Into Your Car’s Safety Rating

“Insurers often increase premiums for cars that are a greater risk for damage or occupant injury,” Brower says.

Purchasing a car you know is safe will be better on your wallet — and your peace of mind.

3. Ask About Discounts and Bundles

You could get a discount or refund on your car insurance for a being a good student, insuring multiple vehicles, avoiding accidents and more.

“Most car insurers provide discounts to student-drivers who maintain good grades,” Brower says. “In some states, younger drivers are also able to take driver safety courses that will lower premiums.”

4. Drive Less Often and More Carefully

Consider joining a carpool, or take alternate transportation when possible. Driving fewer miles could help reduce your premium.

And when you drive, be careful.

“Safe drivers can take their rates into their own hands with usage-based insurance programs like Progressive’s Snapshot,” Davis explains.

“Snapshot offers discounts by collecting information on your actual driving habits. Drivers who avoid unsafe practices such as hard braking, rapid acceleration and driving late at night can earn a discount.”

“Insurers love a clean driving record,” Brower added.

The drivers sharing the road with you will love it too!

5. Shop Around

Don’t settle for the first quote you get.

“Rates can vary by carrier so we encourage people to shop around and find the right coverage at the right price for them,” said Davis.

He pointed out several surprising ways Progressive offers to save money on car insurance:

“Drivers can save simply by starting a policy online, bundling their auto insurance with another product (like renter’s insurance), having multiple cars on a policy, paying in full or even being a good student,” he says.

Before signing up, make sure you do your research and find the best deal for your situation.

Want to Save Even More?

We know you might not have control over all of these factors.

Maybe you don’t want to leave your job or move to a different city just to save money on car insurance.